News: Statement on Auditor General’s Report on Impact Fee Funds

- Pa. Auditor General Eugene DePasquale stated Tuesday that a recent audit of the Public Utility Commission’s oversight of a fund to help alleviate the negative local effects of natural gas drilling demonstrates the need to correct the authorizing law’s spending guidelines, reporting requirements, and state oversight.

- The Pennsylvania State Association of Township Supervisors, whose member townships are the site of most of the gas well drilling in the commonwealth, is taking this opportunity to respond to the auditor general’s statement on this matter.

The following statement was issued today by David Sanko, executive director of the Pennsylvania State Association of Township Supervisors (PSATS), which represents the 1,454 townships of the second class across Pennsylvania. Townships, in turn, represent more residents — 5.5 million Pennsylvanians — than any other type of political subdivision in the commonwealth and cover 95 percent of the commonwealth’s land mass.

“We commend Auditor General Eugene DePasquale on undertaking this review of the state’s municipalities and counties receiving the gas well impact fee and some recommendations for improving spending, reporting, and oversight requirements but must also point out that his findings are based on a review of spending in only 20 of the 1,487 municipalities receiving these funds and some of the conclusions are faulty or misdirected.

“Expenditures that are permissible by law should not be held out as ‘wrong’ because some in Harrisburg may have different personal spending priorities.

“We feel confident that our member townships are indeed following the Act 13 spending and reporting guidelines. PSATS has been diligent in communicating these requirements to its members and has published numerous articles about the act and the 13 categories of eligible expenditures laid out in the law. In addition, we have run several articles in our magazine about the many wonderful ways townships are spending the impact fee money to improve their communities.

“If the auditor general takes issue with the commonwealth’s rules governing the eligible expenditure of the gas well impact fees, he should not take that out on our member townships, who have only been abiding by the rules as laid out in Act 13, the impact fee law. We welcome the opportunity to comment and engage on any improvements to Act 13 just as we support efforts to improve the Open Records Law after a period of time has passed since its initial enactment.

“The auditor general also noted findings of overpayments to some municipalities, but these calculations are based on the current PUC guidance of ‘total budgeted revenues,’ which conflicts with the PUC’s final implementation order of May 26, 2012, which is what municipalities have been complying with.

“The auditor general should consider recalculating the alleged overpayments based on the rules in place when the reports were due to the PUC. This shows confusion on the part of the auditor general’s office with the PUC’s guidelines.

“We also take exception to what appears to be the auditor general’s – and thus the commonwealth’s – poorly veiled attempt here to go on a hunting expedition for money that they think is better spent by the state, not the deserving municipalities that are the most impacted by gas well drilling directly in their communities. This appears to be yet another Harrisburg insiders’ attempt to take money from the local level and put it in state coffers.

"These impact fees have provided approximately $856 million for projects in every corner of the commonwealth since 2012. This funding has been a game-changer for local communities.

“More than 60 percent of the collected funds go directly to communities most impacted by drilling, with those hosting the most wells receiving the largest checks. Municipalities are using the revenues for a range of eligible projects – from road and bridge infrastructure and public safety to environmental programs and planning for the future. All of these investments directly benefit the citizens and businesses impacted by the energy industry.

“If the auditor general would like to see changes to the law to clarify the PUC’s spending and reporting requirements, we are open to offering our input on any legislation introduced to amend the law.

“In the meantime, we believe that the overwhelming majority of our member townships are properly using the impact fee money for current projects and future spending as authorized by Act 13 and the PUC’s guidelines for the expenditure of these fees. Funding spent on ineligible categories should stop immediately.”